Alternative energy

Zuma in China: Renewables high on agenda


South African
President Jacob Zuma


26 August 2010 - Suntech Power Holdings Co Ltd, China's largest maker of solar panels, said on Thursday that it has signed a deal to develop solar plants in South Africa with up to 100 megawatts in capacity as the country looks to boost clean energy output.

The signing of the memorandum of understanding (MOU), which coincided with the visit by South African President Jacob Zuma to China, was one of a dozen deals involving investments in energy, power transmission and railways between the two nations.

Zuma has urged China to invest more in infrastructure and manufacturing in his country, as his government seeks to broaden South Africa's economic appeal beyond mines and resources.

Analysts say total investment for building a 100 MW solar power plant could be between $350 million and $400 million.

"This (deal) highlights that there are so many markets that are completely off the radar screen for people who follow the sector, South Africa being one of them," said CLSA analyst Charles Yonts. "It's good for Suntech most definitely."

Suntech sells solar equipment to Australia, Germany, Japan, Peru, Spain, Thailand, the United Arab Emirates and the United States.

The deal also highlights China's desire to export its infrastructure and building expertise, with Beijing offering cheap loans to countries that agree to let Chinese companies build power plants, roads and telecommunications networks.

Suntech's non-binding MOU had no financial terms, Rory Macpherson, director of investor relations, told Reuters. He declined to name the South African companies in the project.

"We're exploring development of solar projects with an unnamed solar firm," Macpherson said, declining give a timetable for the investments.

"Obviously, we are committed to developing the solar market in South Africa. We will look for solar opportunities as soon as possible," he said, adding that the total size of the photovoltaic market in South Africa could be more than $1 billion.

Suntech's agreement is the latest among Chinese renewable energy companies looking to enter South Africa.

China Longyuan Power Group Corp Ltd, the nation's biggest wind power producer, has said it is setting up wind projects in South Africa, according to media reports. Longyuan was not immediately available for comment.

Those deals included a 240 million euro loan agreement between South Africa's third-largest mobile phone operator, Cell C, and China Development Bank, and a memorandum of understanding signed between South Africa's Standard Bank Group and China Railway Group Ltd to cooperate on funding for rail and infrastructure projects in Africa.